WestJet Group to buy Sunwing Airlines

A Sunwing Airlines Boeing 737 lifts off.
BriYYZ from Toronto, Canada, CC BY-SA 2.0, via Wikimedia Commons

LONDON – The Canadian regulatory review of the WestJet Group’s takeover of Sunwing Airlines has been completed and proceeded to the next stage. Sunwing is a Canadian low-cost airline headquartered in Toronto, offering scheduled and charter air services.

Sunwing takeover

“We thank the Competition Bureau and welcome their report,” said Angela Avery, WestJet Group Executive Vice-President and Chief People, Corporate, and Sustainability Officer. “We look forward to bringing this transaction to life for the benefit of Canadian travelers, communities, and employees.”

The report of the Bureau is advisory and non-binding but it will support the Minister of Transport’s public interest assessment. The final decision, which will be made by the Cabinet on the Minister of Transport’s recommendation, will consider additional factors presented in the WestJet Group’s application.

Considerations include the preservation of Sunwing’s brand, the commitment to maintain Sunwing’s Toronto and Montreal offices, new flying that will be created by retaining Sunwing’s aircraft in Canada year-round and the resulting new employment opportunity.

At the same time, the Canadian Transportation Agency has positively determined the proposed transaction. WestJet thanked the Agency for its review. With the Bureau’s report’s publication and the Agency’s determination issuance, the transaction’s regulatory review process moves into its next stage.

The WestJet Group announced its intent to acquire Sunwing on March 2, 2022. The transaction is central to the WestJet Group’s commitment to prioritize leisure and sun travel from coast to coast and increase affordable air and vacation package offerings for all Canadians.

The transaction is expected to close by spring 2023 pending remaining regulatory and government approvals.

The Canadian government has released on its website a reference to their report in detail of the Competition Bureau which details how the takeover would affect the market.

In their words, “based on the analysis above, the Commissioner has determined that the Proposed Transaction is likely to result in substantial anti-competitive effects through the elimination of rivalry between WestJet and Sunwing in the areas of overlap. In particular, the Proposed Transaction is likely to result in the following if it proceeds in its current contemplated form:

  1. a substantial lessening or prevention of competition in the provision of vacation packages on 31 routes between Canada and Mexico or the Caribbean;
  2. a merger of the only two carriers offering non–stop service on 16 of these 31 routes; and
  3. a significant reduction in leisure travel by Canadians in the overlap markets.

The Bureau has attempted to fully explain the basis for its concerns in the foregoing report, while taking into account the confidentiality provisions in the Competition Act, and the Commissioner’s mandate under the CTA. The Commissioner’s concerns are the result of an assessment consistent with that conducted when applying section 92 of the Competition Act to transportation undertakings.”

What the report is basically stating is that the takeover of Sunwing will in fact make the entire Canadian aviation market less competitive in the more competitive markets, as there will be fewer airlines on the market, which has the big possibility of driving prices up and driving inflation even higher.

Transport Canada has until December 5, 2022, to complete its public interest assessment and provide it to the Minister.

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